California Warning

The Mamas and the Papas sang about California Dreaming.  Things have changed in the Golden State since the ’60s, however.  Now, whenever I enter the California-plated rental car for our little trip through southern Arizona and New Mexico, I get a weird  California Warning.

It’s a big, intrusive notice plastered right there on the driver’s side door that tells me that operating a motor vehicle can be hazardous to my health.  You see, the State of California apparently knows — hey, that’s the word the notice uses — that engine exhaust, carbon monoxide, phthalates (how is that pronounced, anyway?), and lead cause cancer and birth defects.  So what’s a driver to do?  Well, the notice says you should avoid breathing exhaust fumes and idling your engine, you should service your vehicle — I think that means gas it up when the tank runs dry — in a well-ventilated area, and you should wear gloves or wash your hands frequently when servicing your vehicle.

From the look of the notice, it appears that California voters enacted one of their voter propositions — in this case, Proposition 65 — that requires the notice.  In fact, Proposition 65 was passed in 1986 and, among other things, requires the State of California to assemble and publish a list of chemicals that cause cancer or birth defects — which now includes about 800 chemicals — and obligates businesses to notify consumers about chemicals in products. Hence, the Big Brother-type notice on our rental car.

I have to say that the notice gives me a laugh every time I get into the car.  Why?  Because, based on what I’ve seen of California, it’s got to be one of the most ignored — even flouted — notices in the history of governmental notices.  Californians don’t exactly seem to be avoiding their cars; California traffic congestion is easily one of the worst in any state.  And because of that, Californians are routinely breathing in those bad exhaust fumes as they wait in a colossal traffic jam on “the Santa Monica Freeway” or “the 405” or any of the countless other highways that are always subject to a traffic snarl at any time of the day or night.  And I haven’t noticed Californians donning gloves at the filling station as they fuel their cars or rushing to wash their hands after gassing up, either.  Apparently they’ve made the rational judgment that washing your hands in one of those gross, soiled sinks in a gas station bathroom is more hazardous that those phthalates.

By the way, phthalates are pronounced ftha-lates.

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Reining In Excessive Fines

Yesterday the Supreme Court ruled that the Eighth Amendment to the U.S. Constitution — which states that “[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted” — imposes limits on the abilities of state and local governments to seize assets and property and impose financial penalties.  And the Court’s ruling applying the “excessive fines” clause of the amendment to state and local governments was a unanimous one, which is a welcome development in our era of increasingly divided politics.

gettyimages-1066751830The case involved an Indiana man who was arrested for selling several hundred dollars’ worth of heroin, had his $42,000 Range Rover seized as part of the process — even though the maximum fine for his crime was $10,000 — and sued to get his car back.  The Indiana Supreme Court ruled that the “excessive fines” clause of the Eighth Amendment did not apply to the states, even though the “excessive bail” and “cruel and unusual punishment” clauses have long been applied to the states.  The Supreme Court, in an opinion written by Justice Ruth Bader Ginsburg, disagreed.

The decision yesterday addresses a significant real world issue — namely, how far can states and local governments go in imposing monetary penalties and seizing property from people who violate the law . . . or, in some cases, are only accused of violating the law.  Because raising taxes isn’t popular with voters, state and local governments have increasingly looked to aggressive forfeiture practices to fund part of their operations.  Briefs filed in the Supreme Court noted that more than half of municipal and county agencies who participated in a survey said reliance on forfeiture profits was a “necessary” part of their budgets, and that, in 2017, 10 million people owed more than $50 billion in criminal fines, fees and forfeitures. And the aggressive penalties aren’t limited to drug offenses.  One brief in the Supreme Court, for example, described how a $100 ticket for a red-light violation in California results in another $390 in fees.

In holding that the excessive fines clause applies to the states and local governments, Justice Ginsberg noted that “[e]xorbitant tolls undermine other constitutional liberties,” and added:  “Excessive fines can be used, for example, to retaliate against or chill the speech of political enemies. . . . Even absent a political motive, fines may be employed in a measure out of accord with the penal goals of retribution and deterrence.”

Now that the states know that they can’t impose excessive fines, it will be up to the courts to determine whether the aggressive property forfeiture and fining practices, like the seizure of the Range Rover, are “excessive” or not.  We’ll have to see how that works out, but for now it’s nice to know that Americans have another constitutional protection against potentially overreaching governmental actions.

40 Years Of 401(k)

Last year, 401(k) employee retirement savings plans hit a venerable milestone — the 40th anniversary of their creation.  401(k) plans were born during the Carter presidency, with the passage of the Revenue Act of 1978, which established Section 401 of the Internal Revenue Code.

stk27434sigThe language of the statute is the dense, definition-filled content that tax lawyers love, but the concept of the 401(k) is simple:  workers can salt pre-tax money away in protected funds and invest it, thereby enjoying some tax savings and having a vehicle to save for retirement.  Many employers offer 401(k) plans as a part of their benefit package and facilitate the program through payroll deductions.  According to the Investment Company Institute, in 2016 there were almost 555,000 401(k) plans in the U.S. and more than 55 million Americans were active participants.  The ICI also reports that, as of the end of the third quarter of 2018, 401(k) plans held $5.6 trillion in assets — up from $2.2 trillion in 2008 — and represented 19 percent of the total amount of U.S. retirement assets.

Some people raise questions about the 401(k) option, arguing that its availability has helped to produce the virtual disappearance of employer-funded pension plans, in which the employer totally funded the plan and, in many instance, provided the employee with a guaranteed retirement benefit.  I think that’s wishful thinking.  Even at the time the 1978 legislation was passed, many American companies were looking to cut costs, and guaranteed pension plans were disappearing into the mists of history.  Most of us have never worked for an employer that offered a true pension plan.  To be sure, 401(k) plans are based primarily on employee contributions, not employer largesse — although in many cases employers offer some kind of match to employee contributions.

Unless you’re an investment advisor who pines for the long-lost days of funded pension plans, though, you’re probably grateful that Congress was far-sighted enough to create the 401(k) option 40 years ago.  And it’s not hard to argue that 401(k) plans are, in some respects, superior to pension plans.  The 401(k) option gets the worker directly involved in her own retirement planning; employees have to elect to participate in the plan, after all, determine how their contributions will be invested, and then have their contribution withheld from their paychecks.  The 401(k) mechanism makes that as painless, relatively speaking, as withholding for federal and state taxes and Social Security contributions — because it comes out automatically, most people don’t notice it.  And then, after a few years, workers realize that they’ve actually made progress in starting to save for retirement, and for many people that realization opens the door to additional efforts to save, invest, and get ready for the retirement years.  The 401(k) option has made many Americans take personal responsibility for their own financial affairs, rather than relying on a company pension plan to do the trick.

And you can argue that 401(k)s have had a broader benefit, too.  So much automatic saving has to be invested somewhere — principally in the U.S. stock market.  In 1978 the Dow was well below 1,000; now it stands above 25,000.  No one would argue that 401(k) plans have been solely responsible for that run up, but there is no doubt that they have contributed to buy-side pressure that has helped to move the stock market averages upward, which has the incidental benefit of helping all of those 401(k) participants who’ve put their retirement savings into the market in the first place.

Happy anniversary, 401(k)!  Beneath that Tax Code jargon lurks an idea that has been helpful to millions of Americans.  I’d say we need to give credit where credit is due:  the 401(k) is one time when Congress did the job right.

Messing Around With Genes

Since 2015, Congress has included language in its funding bills to prevent the Food and Drug Administration from approving any application to create in vitro fertilization children from embryos that have been genetically modified.  Because the prohibitory language has been included in funding bills that have expiration dates, it needs to be renewed every year.  The House of Representatives just passed legislation that includes the renewal language, as part of an effort to fund certain governmental activities like food stamps and drug approvals.

Khan1The issue of genetic modification of embryos has some special urgency these days, with the recent news that Chinese scientists have announced the birth of the first genetically modified children — twin girls whose genes allegedly have been altered to supposedly make them specially resistant to HIV.  The Chinese scientists used a protein to edit the genes on a “CRISPR” — a stretch of DNA.  Some people question the validity of the Chinese claim about these so-called “CRISPR babies,” but there is no doubt that genetic manipulation of human beings is moving from the realm of science fiction to the reality of science fact.

The bar to such activities created by Congress ensures that efforts to genetically modify humans are not going to be happening in America — at least for now.  Is that a good thing?  The FDA Commissioner has said:  “Certain uses of science should be judged intolerable, and cause scientists to be cast out. The use of CRISPR to edit human embryos or germ line cells should fall into that bucket. Anything less puts the science and the entire scientific enterprise at risk.”  Others argue that Congress has taken a “meat axe” approach when it should be crafting a more nuanced policy that recognizes that some genetic manipulation could be beneficial.

It’s hard to know what’s right.  Scientists have been involved in the reproductive process for years, and their work, through processes like in vitro fertilization, has allowed people who are struggling to conceive to realize their dream of having children.  But I think the notion of scientists tinkering with genes to create “better” human beings crosses a line in several ways.  First, I’m not entirely confident that scientists know what they are doing and that there won’t be unintended, negative consequences from the removal of the genes the scientists snip out.  Anyone who has read about the history of science knows that scientists have been wrong before, and its reasonable to think they might be wrong again — only this time, their errors wouldn’t just be about the impact of certain foods or the properties of atoms, but would directly affect specific human beings.  Second, where do you draw the line in genetic manipulation?  Modifying DNA sequences to try to avoid diseases or debilitating health conditions is one thing, but what if scientists want to edit genes to create humans who are smarter, or more athletic, or taller?  Do we really want to permit the creation of “designer people” — like Khan Noonien Singh, that memorable Star Trek character who was genetically modified to be a kind of superhuman?  And finally, as this article points out, the whole issue brings up uncomfortable memories of the eugenics arguments of the early 20th century, where certain ethnic groups and traits were considered superior and others inferior.  If “improved” humans are created, where does that leave the rest of us?

In my view, this is an area where a sweeping rule makes sense — at least initially.  I think we need a lot more evidence, and a lot more thinking, before we should allow scientists to go messing around with human genetic material.

When The Shutdown Hits Home

You could almost forget about the government shutdown, it being the holidays and all — except for the fact that the port-a-potties at the national park next door have been closed and sealed and aren’t available for use. The sign on the door reads: “AREA CLOSED. Because of a lapse in federal appropriations, this national park facility is closed for the safety of visitors and park resources. Please visit http://www.nps.gov and select ‘Find A Park’ for additional information about access to other parks and sites in this area.”

You learn something new every day, I guess. I had no idea a port-a-potty is a “national park facility,” or that letting a visitor use it for its intended purpose would pose a risk of safety to visitors and national park resources. An inoperable port-a-potty seems like a good metaphor for our federal government these days, though, doesn’t it?

Another Date That Will Live In Infamy?

There are some notorious dates in American history.  FDR declared December 7, 1941, the date of the Japanese attack on Pearl Harbor, “a date that will live in infamy.”  September 11, 2001 obviously is another, and so is April 14, 1865 — the day John Wilkes Booth shot Abraham Lincoln, and sent history veering off into a different direction.

96898152_twittermasthead

Should February 5, 2013 join them in the annals of infamy?

Why?  Because, according to this interesting article in Politico, that’s the date Donald Trump learned how to send tweets all by himself.  Before then, all of The Donald’s tweets were typed and sent by his social media manager.  But on February 5, 2013, Trump personally composed and issued a tweet that was a simple thank-you to an actress who said something nice about him . . . and the rest was history.

Of course, you can’t really equate mastery of Twitter with a bombing that pulled America into World War II, or the assassination of the greatest President in American history — but the Twitter breakthrough clearly has had profound implications.  Before, politicians and Presidents tended to communicate with the American people primarily through speeches and prepared statements that could be carefully vetted.  Now, tweets are issued directly from the President himself, without any ghost-writing or review.  Ill-advised 140-character (now 280-character) blasts thumbed in at odd hours can set a new direction for American policy or radically change the news cycle.

In my view, that’s definitely not a good thing.  But the genie has escaped the bottle, and you wonder if we’ll ever get back to the day when there is some kind of gravitas and mystique — and distance from the masses — to the office of the Presidency again.

And here’s an even more disturbing thing:  according to the Politico piece, President Trump’s former social media manager is advising him to “up his game” on social media and engage more personally with his supporters, by making his Instagram account more interesting and doing things like live-streaming from the Oval Office.  Hey, what could go wrong with that?

Holding Congressional Harassers Accountable

We frequently criticize the Congress in this country, and for good reason.  So when Congress does something right — and on a bipartisan basis, to boot — it’s only fair that it should be recognized.

Sexual-Harassment-in-the-Workplace-722x406Yesterday Congress passed legislation that would end taxpayer financing of settlements of claims of congressional harassment of staffers.  Under the current system, if a Senator or Representative is accused of sexual misconduct and decides to settle the claim, the settlement is funded by our tax dollars.  And, because settlements typically involve strong confidentiality protections, we may not even learn of the existence or nature of the harassment claim or the amount of the settlement payment.

And get this:  more than a thousand former congressional staff members wrote to Congress in support of the bill.  One of the bill’s sponsors, Democrat Jackie Speier, said that their letter “made the case all too clear, that sexual harassment in Congress was a huge problem.” Speier added:  “Time is finally up for members of Congress who think that they can sexually harass and get away with it. They will no longer be able to slink away with no one knowing that they have harassed. … They will pay back the U.S. Treasury.”

The legislation reflects a compromise, as congressional legislation typically does; it also caps lawmaker liability at $300,000 if there is actually a court finding of harassment and assessment of damages.  But at least court cases and decisions are matters of public record, so the misbehavior of the Senator or Representative will become known to all and they can be held accountable by voters for their misconduct.  In my view, that cap on damages is more than outweighed by the elimination of taxpayer funding of settlements, a requirement that Congress report on and publish such settlements, and changes to other rules to strengthen protections for congressional staffers.

I don’t like the special treatment that members of Congress routinely receive, and my tax dollars obviously shouldn’t go toward enabling congressional misbehavior and funding secret settlements to cover it up.  I’m glad Congress finally agrees with that common sense conclusion.  The bill now goes to President Trump for his consideration.  Let’s hope he also sees the light and signs it into law.